Costco Wholesale Corp /New COST

In our econometric model, Costco's FY revenue grew 18.7%, but SG&A elasticity at 1.08x implies cost growth outpaces revenue as the business scales. That means roughly 1% more revenue associates with about 1.08% higher SG&A, so the top-line gain could push SG&A up near 20% year over year, potentially compressing operating margins unless gross margin or membership-driven revenue offsets it. Our econometric model's holdout error of 2.2% (71.1B predicted vs 69.6B actual) with a 1.6% MAPE over 48 quarters signals solid forecast reliability but reveals cost-structure sensitivity to near-term dynamics. Risks to the growth path include wage-driven SG&A pressures, international expansion economics, and inflationary shocks that could erode incremental margins.